Your residents are up against some tough financial challenges. The cost of living crisis makes it $119.27 more expensive to buy goods a family could get with $100 pre-pandemic. Gas prices are also rising, and, in 2023, the cost of rent spiked by 30% or more in some US cities. These issues aren’t only stressful but also affect your residents’ money. Soon rent payments can start to falter, impacting your rental income and bottom line. Not good.😧
The great news is there’s a solution to keep your business on track that few are talking about. Upgrading resident financial health using flexible payment options. This article will explore why aiding residents in improving their financial well-being is a smart move. We’ll also share how some forward-thinking businesses are helping residents get ahead with flexible payments.
Table of contents
- Why improving residents’ financial health is so critical
- How flexible payment options make everyone’s lives better
- 3 organizations helping residents optimize their financial health
- Create a thriving business by focusing on resident financial health
Noticed a decline in on-time payments? Get paid faster with Flex.
Why improving residents’ financial health is so critical
With so many goals you could be tackling, you may wonder whether it’s worth prioritizing resident financial health. The answer is “absolutely”! In case you’re still on the fence, let’s dive into some reasons why the move is essential:
- Buyer expectations and interest in digital experiences are increasing: In today’s fast-paced, tech-driven world, convenience, and digital experiences win. These trends are alive and kicking in property management. For instance, 76% of renters want digital payment options when getting a security deposit refund from a landlord. 👩💻
So, to succeed in the changing landscape, you’ll need to provide payment options your residents actually want. These payment options mimic those your residents use daily, not just the industry standard. We’re talking digital solutions like a rent payments app, one-click payments, and automatic payments. (More on flexible payment options later). - Tightened consumer purse strings: As the cost of living crisis intensifies and recession looms, people are feeling the pinch. 64% of employees stress about money, and 67% say living costs are eclipsing their salary. Battling these circumstances, even the best residents can struggle to make ends meet. This situation is worrying since hard times can reflect in residents’ rent payments, or should we say lack of. So, it pays to help residents stay on top of their finances.
- Increased competition in the housing world: Like it or loathe it, it’s a resident’s market, and competition is stiff. ⚔️ This shift makes securing deals more challenging, and soon, resident retention and your rental income can take a hit. So, finding ways to make residents feel appreciated and incentivizing them to stick around is a must. A great way to do this is to help upgrade your residents’ finances.
How flexible payment options make everyone’s lives better
Offering residents flexible payments is a surefire way to level up their finances. But residents aren’t the only ones who benefit from flexible payment options; your business will, too. Let’s cover some perks:
Boost resident numbers, tenancy durations, and resident quality📈
Want to know a key business metric you’ll improve by offering flexible payments? Those almighty retention rates. Providing flexible payments makes contract negotiations easier since residents can stagger rent payments. This feature is a huge deal since rent is many people’s biggest expense. It’s also a revenue driver, encouraging potential renters to sign up and existing residents to extend their leases.
A knock-on effect of facilitating more relaxed payment options is upgrading resident quality. Since you’ll spend less time chasing down rent, you’ll have more time to optimize the business. For example, say you reinvest the time into improving resident screening processes. This adjustment will lead to fewer issues and complaints. So, if you’re looking at retention strategies, flexible payment options should be on the list.
Steadier cash flow and increased net operating income (NOI)
Following the last point, happy residents stay longer, creating a more predictable cash flow for your business. It also reduces the financial and time investment your team has to put in to fill vacant apartments. And here’s the icing on the cake. Digital payment solutions have shorter processing times than traditional options like checks and bank transfers. So you can access the cash sooner.💰
Get faster rent payments with fuss-free processes
Worried that slow payments are holding you back? 28% of businesses feel the same, identifying sluggish payments as their top challenge. In property management, the issue lies in the payment-related admin renters have to endure. From triple-checking banking information to keying in card details, some payment options are so slow and painful that they’re a chore.🤦♀️
To make matters worse, renters must do the whole thing again the next month, and mistakes are common. These issues have financial consequences. 79% of renters say they’ve received incorrect, delayed, or lost payments from their property management company, which led them to not rent from them again. Making it easier for residents to pay rent with fast and flexible payment options removes these friction points. As a result, operators get rental income sooner and will have satisfied residents.
Slash time and money spent on admin to improve operational efficiency
Notifying residents of upcoming changes. Sending rent payment reminders. Solving collection issues. Updating the resident database. These tasks are all in a day’s work as a property manager. The problem is these to-dos are a huge time suck, and the associated bills rack up fast. For instance, the typical office worker spends 69 days per year cranking out administrative and repetitive tasks and, labor costs account for 50-60% of a business’ spending. So, when you consider the average margin for property management business sits between 10%-15%; one thing is clear. Spending too much time on admin will have negative financial ramifications. 💸
Residents also feel the impact of burdensome admin through slower response times and processes. Worse, lengthy wait times can affect their financial health when problems involve money. For instance, billing residents twice for rent during Rent Week when other bills are due because of a manual payment process. Adopting digital, flexible payment options prevents inefficiency-fueled defaults. It also eliminates many manual processes, like collecting rent and tracking missed payments. So, residents are more likely to pay on time. This change also unlocks more time to scale the business and serve residents.
Upgraded customer experience, satisfaction, and loyalty
Did you know that 78% of residents say having digital payments would improve their view of their property management company? 72% of customers want immediate service too. In short, providing digital and flexible payment options enhances your customer experience. This is especially true when the payment tools are like those residents use daily.
As previously mentioned, flexible payments also make residents more likely to pay on time. But that’s not all; renters paying on time through modern tools can build their credit, further up-leveling their finances.
For example, Flex offers an intuitive, self-serve mobile app for rent payments. Flex extends credit to renters to cover rent and guarantees the full rent payment to landlords on the first of every month. Residents who use the app can then split rent into two manageable parts and pay on the go. As a result, residents get a payment experience that’s as quick and easy as ordering groceries online. Residents also get payment flexibility, allowing them to better align rent costs to their finances and boost their credit while the landlord gets rent on time.
How 3 organizations are helping residents optimize their financial health
Now you know why improving resident financial health is so important, you might be wondering how to go about it. Let’s get some ideas from some organizations that have successfully made the leap:
Sage Ventures (A property management company)
Sage Ventures is a Maryland-based property management company with 4,000 units and counting. The property management team received increasing requests from residents for flexible payments. They also noticed a spike in delinquent payments. So, Sage decided to trial Flex’s rent payments app. This solution allows residents to split payments into two manageable chunks. This feature makes rent payments easier and increases on-time collections.
After a successful first run, Sage adopted Flex across its portfolio. Following this move, Sage saw a decline in delinquencies. Sage now also saves 5 hours each month on admin per assistant manager, which they now use on strategic tasks. Plus, Sage has processed $2.2 million in rent payments since July 2023 using Flex.👌(Read more about Sage’s inspiring journey with Flex here).
Key takeaways
- Empower residents with DIY tools
- Use split payments
- Remove manual rent collection and follow ups with technology
The UK Government (GOV.UK Pay)
Across the pond, the UK government, and its respective public sector organizations have gone digital. In 2015, the government launched GOV.UK Pay. This solution provides flexible payments for things like rent, council tax, and passport applications. Recurring payments are also in the works. These tools place residents and landlords in charge of their finances. The game-changer is allowing users to spread out payments to fit their financial needs. For example, users can make multiple council or income tax payments before the bill is due at no extra cost. The switch to flexible payments has paid off. GOV.UK Pay processed half a million transactions in under 2 years. Now, the UK government uses the service in over 400 services in around 150 organizations.
Key takeaways
- Identify which business areas could use flexible payment options
- Keep improving your tech stack with payment options your residents prefer
- Once you’ve got proof of concept, expand the payment options across your business
Somak (A property management company)
Burdened by their rent collection admin, Somak tackled the issue head-on. The team implemented an online payment solution and automated data entry tasks. These moves drastically uplevelled Somak’s efficiency, saving them 15-20 hours weekly. The team now benefits from better payment attribution to corresponding accounts, happier staff, and improved employee retention.
Key takeaways
- Observe which tasks take the most time and energy from your (team’s) day
- Take advantage of automation to reduce administrative burden and step up service levels
- Once you’ve optimized payments, look for other opportunities to improve operations
Create a thriving business with a resident financial health strategy
Whether you’re flying solo or have a small team, it’s tough out there. Your residents are battling a rough financial climate, too. But it’s not all doom and gloom. Fostering better resident financial health with flexible payment options is a smart way to get ahead.
Flexible payments make negotiating and closing deals easier while taking the fuss out of collecting rent. But remember, not all solutions are made equally. So, create a payment strategy and research providers thoroughly. Opt for a trial, and adjust your strategy continuously. Aim to make payments a highway to success, not a barrier. Before you know it, the deals will be rolling in, and your property management business is thriving. 🏆
Is your payment stack costing you business? Learn how Flex can make you a renter’s first choice. Book a demo.
